N.B.: I have lightly edited and corrected the text of my talk as delivered. Citations for the quotations follow the text.

Some weeks ago, Steve Schueth called me. ‘We want you to open Wednesday morning with some words of wisdom.’

‘No! No! Steve. Anything but “words of wisdom”’ I pleaded. ‘Welcome to New England. How I spent my summer. Anything but words of wisdom.’

So, Steve, thank you for asking me for ‘words of wisdom’. As the Spanish proverb says: ‘If I die, I forgive you; if I recover, we shall see.’[1]

Ideas & The SRI Conference

Robert Strauss once said, ‘Before I begin this speech, I have something to say.’[2]

I’ve limited my supposed wisdom to SRI. That way, I won’t run grossly under my time.

For as Alan Greenspan once told the Senate Finance Committee, ‘I have been able to string more words with fewer ideas than anybody I know.[3]

I’ve never noted SRI to be short of ideas. Much credit for that goes to First Affirmative. For 23 years, it has brought people together to talk, to conspire, to disagree, to create, to realise. That’s why your presence, your active participation here is so important.

So, now to stringing some words from which you may get some ideas.

Mohegan Sun Wisdom & Economics

Since we’re at Mohegan Sun, I must quote that richest of poker players, Warren Buffett: ‘If you’ve been in the game for 30 minutes and you don’t know who the patsy is, you’re the patsy.’[4]

Of course, we’re not here to gamble. We’re here to talk about finance. That brings to mind Paul Krugman’s seven word definition of ‘economics’: ‘Greedy people, competing, make the world go round.’[5]

Which is why Louis Auchincloss observed in his worst book, The Embezzler: ‘It is always risky for a financial man to be seen entering a church on a weekday.’[6]

You want wisdom, newcomers to the financial world? That’s wisdom.

Auchincloss based The Embezzler on the story of Richard Whitney, president of the New York Stock Exchange. In 1933 Whitney told US Senators investigating the 1929 Crash, ‘You gentlemen are making a great mistake. The Exchange is a perfect institution.’[7]

Of course, he was stealing – unnoticed – from the perfect institution’s charitable fund. Social investors’ unwillingness to believe in any institution’s perfection isn’t our worst trait.

From the start, social investors took to heart Justice Louis Brandeis:

There is no such thing … as an innocent stockholder. He may be innocent in fact, but socially he cannot be held innocent. He accepts the benefits of the system. It is his business and his obligation to see that those who represent him carry out a policy which is consistent with the public welfare.[8]

Social Investment’s Challenge

So, why are we Social Investors? John Maynard Keynes wrote:

Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of … holding … “liquid” securities. It forgets that there is no such thing as liquidity of investment for the community as a whole. The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future.[9]

The ‘dark forces of time and ignorance….’ Those are our opponents.

Keynes and Brandeis, two unorthodox heroes, wrote in times much like ours.

In times of financial stress, it’s difficult for clients to shout with story-teller/singer Bruce ‘Utah’ Phillips, ‘To hell with the mainstream. It’s polluted.’[10]

Economics & Finance

We’ve also learnt, where economics and finance are concerned, that George W. Bush was astute – yes, you heard me right – astute when he said, ‘You can fool some of the people all of the time, and those are the ones you have to concentrate on.’[11]

We’re seeing in Congress the devastating success of this concentration. But we in social investing lack the luxury of time to ask, as Ogden Nash did:

Who to Blame?
Leaders who are followers
Or followers who are swallowers.[12]

We’ve become a sturdy band, we social investors. Still, we must touch more people, affect more investment decisions.

Choices of Words & Facts

One problem we confront is our choices of words. Take ‘sustainable’.

Some years ago, I went to a Euro SIF conference in Paris. Much of the conversation was in French which I don’t understand. But I quickly picked up the word the French used for ‘sustainable’. It was ‘durable’ – durable.

Durable is a word real people use. They know what it means. ‘Sustainable’? Not so much. And, ‘durable, I might add, is just what social investors and social investment vehicles have proven to be.

Social investors have formed a ‘reality-based’ community. We refute Ronald Reagan’s self-summative statement: ‘Facts are stupid things.’[13]

But being reality-based hasn’t made Social Investors winners in the war of ideas.

In a speech 16 years before he became President, Reagan got a famous laugh when he said, ‘We were told four years ago [by President Kennedy] that 17 million people went to bed hungry each night. Well, that was probably true. They were all on a diet.’[14]

Our challenges are as they have been for 40 years: How do we foster an economic system that refutes that cynicism? How do we persuade our fellow investors to use their capital to the end of a just and durable society?

Social Investors & Truths

Fifteen years ago, the editor of Plan Sponsor magazine wrote something quite radical for his time and audience:

Social investing is usually discussed as if it was the opposite of something else: Call it “pure” investing, which banishes anything but return from consideration in deciding which assets are appropriate and which are not. But the truth is that social concerns permeate institutional investment. The real issue is not whether to have social guidelines but only how many and where to set them.[15]

The truths social investors present are inconvenient (pace, Al Gore). That makes them very hard to listen to, especially since they’ve been said so often and for so long.

As the English historian, R.H. Tawney, wrote in 1926: ‘The attempt to judge economic activity and social organization by ethical criteria raises problems which are eternal….’[16]

Evolution of Social Criteria

While the problem is eternal, the criteria applied change.

A President no one my age will ever think of as a truth-teller said: ‘Either we stop poisoning our air or we become a nation [in] gas masks gasping our way through dying cities.’[17] That was Lyndon Johnson.

In its earliest days – say, the 1970s and 80s – modern social investing did not focus on the environment as it does today. Alcohol and apartheid, tobacco and weapons – gambling and nuclear power – were the dominant issues.

The Exxon Valdez changed that. But the environmental screens of even the most sophisticated social investor in 1990 lacked the depth of today’s. Social investment research and the screens investors apply have evolved with our understanding of the issues we address.

This willingness to adapt to new facts, has made our cause very hard to sell. We have refused – rightly – to stay in the pigeon holes assigned us. Mission creep. Style drift. Inapt but telling analogies for institutional investors.

George Orwell’s friend from boyhood, Cyril Connolly, said of him – and many of us: ‘He could not blow his nose without moralising on the state of the handkerchief industry.’[18]

Social investors insist on thinking for themselves. Which brings to mind a favourite scene in a 2005 movie. A lobbyist speaks to his son’s elementary school classmates on bring-in-your-dad day:

Think for yourselves! Challenge authority! Instead of acting like sheep when it comes to cigarettes, maybe you should find out for yourself.[19]

But, leave aside the moral dimension of social investing – something I don’t think we should do for a nano-second. Think of social investing as the physicist-philospher Freeman Dyson does science:

The public has a distorted view of science, because children are taught in school that science is a collection of firmly established truths. In fact, science is not a collection of truths. It is a continuing exploration of mysteries. . . .[20]

No matter how we try to tame what we do with research and ratings and indexes, we are not dealing with firmly established truths. Our principles guide our continuing exploration of mysteries.

At this point, you probably feel like the Congressmen listening to then Fed Chair Greenspan when he said: ‘I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant.’[21]

So, I’ll end with something clear and wonderful and applicable to social investors. It’s the epitaph Arthur C. Clarke, author of 2001: A Space Odyssey wrote for himself: ‘He never grew up; but he never stopped growing.’[22]

Thank you Steve Schueth, George Gay and First Affirmative – who’ve never stopped growing.

8. As quoted in Robert A.G. Monks & Nell Minow, Power and Accountability (New York: HarperCollins, 1991), p. 4. It is, however, worth looking at the original quotation. The quotation bears a somewhat different – but not inconsistent – nuance in context. Louis D. Brandeis, Testimony Before the United States Commission on Industrial Relations, January 23, 1915, in Osmond K. Fraenkel, ed., The Curse of Bigness: Miscellaneous Papers of Louis D. Brandeis [1934] (Port Washington, N.Y.: Kennikat Press, 1965), p. 75.

16. R.H. Tawney, Religion and the Rise of Capitalism [1926] (New York: Mentor Books, 1947), p. 11. Very out of fashion today, on every page Tawney rewards reading. He wrote brilliantly, quoted judiciously and illuminated every subject on which he applied his spacious mind. Whether he has been proven wrong or not, I can’t judge. But he made me read much more deeply and broadly in early modern British history than I ever would have. To my immense benefit….